Many people experience financial anxiety even if they earn a decent income or do not owe any debts, manifesting in forms such as worry about bills arriving, excessive hoarding or excessive saving strategies as unhealthy coping mechanisms or extreme frugalness.
Recognizing what's causing your anxiety, creating a plan and learning about finance terms are all effective strategies for alleviating anxiety-inducing stress.
1. Make a Budget
Be honest with yourself about your savings, spending, and debt levels before creating a budget to give your money a purpose.
Begin by compiling all your monthly income sources such as wages, pension or other sources as well as bills like utilities and food, then adding one-off expenses such as celebrating an anniversary or birthday party, back-to-school gear purchases or seasonal coffee-flavor releases. After writing down all your expenses for one month, track them for another 30 days so you can gain a better insight into your actual spending habits.
if your budget shows that you're consistently overspending, make adjustments accordingly. For instance, reduce entertainment or grocery spending; switch to a cash-back credit card; save any savings in an emergency fund or Roth IRA; etc. Over time, even small changes can lead to long-term success and increased control over finances1.1
2. Set Goals
Establishing realistic financial goals is a key way to ease anxiety. Your goals could include eliminating credit card debt, saving for retirement or creating an emergency savings account.
People struggling with money anxiety tend to focus on their financial status and may worry that everything could vanish at any moment, which can keep them awake at night and interfere with daily life.
Financial ignorance or negative relationships in childhood may also contribute to feelings of anxiety. Furthermore, those suffering from financial anxiety often do not have anyone they can talk with about their concerns.
Reach out to friends and family who can listen empathetically; join a support group; or seek expert guidance. A certified financial counselor may teach you how to budget, create an action plan to address financial obstacles, as well as teaching techniques like thought-stopping (saying "stop" whenever negative thoughts about money arise) and positive reframing to manage stress effectively.
3. Schedule a Money Check-In
No matter the cause of your financial anxiety - be it divorce or lingering debt issues - finding relief may be challenging. Additionally, anxiety has an enormous negative impact on mental health and can contribute to feelings of depression, hopelessness or suicidal thoughts.
Gaining control of your finances and learning to reduce financial stress can help get things back on track. Meditation or mindfulness practices may also help, as can practicing stress-reducing techniques like exercise. Exercising can reduce anxiety while increasing blood flow to your brain - which in turn improves concentration and financial management abilities.
Locating the source of your anxiety - such as insufficient income or debt - and devising a plan to overcome them is one way to significantly decrease stress levels. Although it might be tempting to overlook these challenges, doing so only serves to worsen them further.
4. Build a Short-Term Savings
Setting up a savings account can provide relief from financial anxiety. Make it a goal of setting money aside regularly, with an aim of saving enough for three to six months' expenses (start small - for instance $25 each month) until you feel more at ease with saving more.
Escaping from financial worries won't help; neither will denial. Take the steps necessary to learn all you can about finances - take a personal finance course or consult an expert.
Financial anxiety and getting in control of your money are possible with time and dedication, and through acknowledging stressors such as negative thinking patterns, setting realistic goals and taking appropriate actions. Mark has over 10 years of experience as an independent personal finance and investment consultant who writes for various blogs such as Money Crashers, Investopedia, Money Under 30 as well as other websites.
